AT a time when inflation and interest rates and bumping along the bottom, savings decline and general spending increases - witness the strength of retail sales over the Christmas period. For assurance companies, the bias towards consumption makes certain short term savings policies less attractive.

Ark Life, the life assurance subsidiary of Allied Irish Banks, this week took some corrective action to improve the attractiveness of its regular savings policies which fell by 17 per cent to £3.9 million last year. The company is to dispense with up front management charges, spreading the fee content over the life of the schemes. Ark Life's finance director Brian Woods predicts sales of new savings policies, repackaged as Personal Investment Plans, will be in the region of £5 million this year.

Over at Hibernian Life, annual premiums from savings products dropped 20 per cent to £4.6 million while income from single premium savings policies tumbled 67 per cent to £7.4 million. However, strong growth on the pensions side saw annual premiums increase by a healthy 50 per cent to £6.5 million.